Andreessen on Venture Capital

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21 May 2014

Marc Andreessen on venture capital:

We think you can draw a 2x2 matrix for venture capital. And this is probably true for all investing, but it’s certainly true for venture capital, which is, you can basically draw a 2-by-2. And on one axis you could say, consensus versus non-consensus. And on the other axis you can say, successful or failure. And of course, you make all your money on successful and non-consensus. Right? Now from this point of reason is because it’s very hard to make money on successful and consensus. Because if something is already consensus then money will have already flooded in and the profit opportunity is gone. And so by definition in venture capital, if you are doing it right, you are continuously investing in things that are non-consensus at the time of investment. And let me translate ‘non-consensus’ in sort of practical terms, it translates to crazy. Right? You are investing in things that look like they are just nuts. Like, who would believe–right? And it’s kind of continuously the case